Government has not studied how the fuel subsidy will work

(FMT) – Finance Minister Lim Guan Eng said the government will study fuel subsidy mechanisms and reveal details later on which one had been chosen.

But he stressed that luxury car owners will definitely not benefit from the subsidy.

Lim said the initial plan was to give the subsidy to the B40 low-income households (with earnings up to RM3,000) but he was looking to extend it to M40 households (with income up to RM6,275) as well.

“We want to study how we can do this. But what I can stress here is that those who have luxury cars can forget about getting the subsidy,” he said at a press conference in Parliament today.

Lim was asked to comment on claims that had gone viral on social media that the fuel subsidy for individual owners of cars with an engine capacity of 1,500cc or less could end up benefiting those who drive luxury marques but with a lower engine capacity.

“We are still discussing this.”

The Bagan MP urged for patience as the mechanism will be implemented in the second quarter of next year.

Yesterday, Lim announced that the government will provide a subsidy of 30 sen per litre of RON95 for up to 100 litres a month for cars with an engine capacity of less than 1,500cc and 40 litres per month for motorcycles up to 125cc.

As many as four million car owners and 2.6 million motorcycle owners are expected to benefit from this subsidy. The subsidy, however, will not be extended to owners of multiple vehicles.

On a related matter, Lim said the government was still focused on fiscal consolidation, but stated that this would not be done over a short period, but over a period of several years.

He said the fiscal deficit of 3.7% this year will be 3.4% next year, 3% in 2020 and less than 3% in 2021. He was of the view that a “very aggressive” fiscal consolidation was taking place.

“Why three years and not one year? That is because we have decided that the people’s socioeconomic welfare should be prioritised.

“At the same time, that will also help to grow the economy. Otherwise, we can easily slip into austerity and contraction. We don’t want that to happen.

“Actually, we have done some belt-tightening, as I have already said.

“When you talk about savings, RM19 billion covers the value of all contracts signed by the previous government. There are no cuts because we want to avoid disputes.

“But we’ve put in a condition of a 10% cut. If they cannot give that, we can go to court and have the open tender process again.

“But I am confident that most of the contractors understand because the contracts were entered into through direct negotiations or limited tenders,” he said to a question on how much savings could be achieved.